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Sunday, August 30, 2009

Some interesting health reform ideas

With the Obama health reform plan evidently struggling, a host of different (political and substantive) approaches are being suggested. Two in today's NY Times alone.

Glenn Hubbard suggests reducing the exclusion for employer-provided healthcare and using the revenue to expand health insurance availability, e.g., via tax credits to the low-income uninsured for purchasing it.

Zero chance this is politically acceptable to either side, but a decent idea substantively, especially if the limit to the employer-provided exclusion targets coverage of routine care outlays.

BTW, Glenn also says Bush blew it in 2005 in his Social Security initiative by emphasizing private accounts rather than addressing financing (in particular at the expense of the upper-income) in exchange for expanding low-income saving. Once again, good policy thinking by my lights but no way this would have worked politically. The left would have said no, and for Karl Rove types in the Bush Administration, drunk as they were at the time on their hubris, the chief goal was to dismantle the belief that Social Security was a government program, as a tool for broader political point-scoring (i.e., they might have been happy with a substantively identical program to the current one in which the checks seniors got changed in only one respect: they purported to be from private companies rather than the government). Of course, it turns out this didn't matter because angry seniors at the healthcare forums appear to believe that neither Social Security nor Medicare are government programs. But that's another matter.

Meanwhile, Bill Bradley recalls that 1986 tax reform was a grand bargain founded on base-broadening for the Democrats in exchange for lower rates for the Republicans. Could we do it again in healthcare? He proposes universal coverage in exchange for tort reform.

Small aside, the empirical literature I'm aware of suggests that, while tort reform would help the problem of rising healthcare costs, it wouldn't do nearly enough. An opinionated senior doctor I was talking with the other day emphatically disagreed (based of course only on his anecdotal sense), arguing that defensive medicine is so prevalent that it would make a big difference.

Obama, in leaving tort reform out of the health reform package, either (a) wisely avoided picking one fight too many as the savings weren't big enough, or (b) cynically catered to the Democrats' trial lawyer lobby, on his own behalf or for Democratic support on the Hill. Take your pick, or say both if you like. I myself am sympathetic to a degree to tort reform, even though it's grossly wrong as a theoretical matter to have doctors not bear the costs of negligence so they will have the right incentives, because I have the sense that the liability process is so wildly askew that we aren't really advancing proper care sufficiently by having it. Being found liable may be more like losing the lottery than anything else, if the outcomes are random enough. But I am not expert in this area, and I'd certainly like people who leave in sponges, sever the wrong blood vessel, etc. to face liability.

Is Bradley right that this bargain could work? I'd like to think so but am skeptical both politically (would either side accept it?) and substantively (does tort reform, especially if tailored responsibly, come close to paying for the other piece?).

Maybe put all these things in the hopper together? But again, presumably it isn't happening.

One last thought, purely on the politics. Shouldn't Obama have called the public option "buying into Medicare," so long as its financing were explicitly separate? People couldn't possibly have gotten hysterical about that given Medicare's popularity. Dumb mistake not to have done it, which is not to say it would have been a good approach in substance.

5 comments:

Picking off a small but critical point in your article. I am also a "senior" doctor and agree with the professional you quoted. Tort reform is overrated in it's cost saving potential. Doctors practice is guided by patient needs and maintaining their reputation. That means peer review in the form of formal institutional requirements and informal impressions given to colleagues. This is the driving force in ordering practices. Fear of suit is only a remote issue for many. This issue of reputation is most important in the referral arena where doctors judge other doctors on the thoroughness and speed of their "work-ups". The variety of tests orders is sometimes, unfortunately, equated with knowledge of the field. So don't expect a big bang for your buck with tort reform (not that it wouldn't be welcomed).

One last point, since I mentioned "big bang" -- why in this healthcare proposal do we want to subject the entire country to an unknown experiment. Should we not try it in limited, yet large juridiction, such as a large state like CA, before assaulting the entire, highly vital, national healthcare system. On a smaller point, in speaking just of tort reform -- several states such as Texas have substantially reformed their medical tort law -- has anyone studied the effect of that action on ordering pattern of physicians?

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About Me

I am the Wayne Perry Professor of Taxation at New York University Law School. My research mainly emphasizes tax policy, government transfers, budgetary measures, social insurance, and entitlements reform. My most recent books are (1) Decoding the U.S. Corporate Tax (2009) and (2) Taxes, Spending, and the U.S. Government's March Toward Bankruptcy (2006). My other books include Do Deficits Matter? (1997), When Rules Change: An Economic and Political Analysis of Transition Relief and Retroactivity (2000), Making Sense of Social Security Reform (2000), Who Should Pay for Medicare? (2004), Taxes, Spending, and the U.S. Government's March Towards Bankruptcy (2006), Decoding the U.S. Corporate Tax (2009), and Fixing the U.S. International Tax Rules (forthcoming). I am also the author of a novel, Getting It. I am married with two children (boys aged 24 and 21) as well as three cats. For my wife Pat's quilting blog, see Patwig’s Blog.